Exclusive: Osborne, ‘They were clearly involved’

After a subdued PMQs, the politics of the Libor scandal has just been ratcheted up another notch. In an interview with The Spectator for this week’s issue, George Osborne has said that those around Gordon Brown ‘were clearly involved’ in the discussion about how to keep Libor down during the 2008 financial crisis.

In the interview, George Osborne gives short shrift to Barclays’s accusation that the Bank of England urged it to get its Libor down. Osborne stresses that this change has been ‘specifically addressed, not just by our own investigators at the Financial Services Authority but also in the US Department of Justice and they are not people who will pull their punches and they’re very clear that the Bank did not issue instructions to Barclays to cut its LIBOR rate.’

But his tone is very different when it comes to the last government. He says, ‘As for the role of the Labour government and the people around Gordon Brown, well I think there are questions to be asked of them’. Discussing the 2008 paper on getting Libor down that was circulated in Whitehall and the note that Bob Diamond wrote referencing senior Whitehall sources after his conversation with Paul Tucker, he declares that ‘They were clearly involved and we just haven’t heard the full facts, I don’t think, of who knew what when.’

Osborne is also keen to keep the pressure up on Ed Balls. He tells The Spectator ‘my opposite number, who was the City Minister for part of this period and Gordon Brown’s right hand man for all of it so he has questions to answer as well.’

This intervention by Osborne will increase the political tensions around the Libor scandal. Expect Ed Balls, who vigorously denies that he has ever had anything to do with Libor, to respond forcefully.

The rest of the interview covering Osborne’s views on Europe and the economy will be out in The Spectator tomorrow.